1981 (6) TMI 91 - AT - Income Tax

Summary

Issues:
1. Penalty under section 271(1)(c) of the IT Act for alleged concealment of income.
2. Bona fide impression of the appellant regarding rental income from a property used for business purposes.
3. Appeal against the penalties confirmed by the AAC.
4. Arguments presented by the appellant's counsel and the revenue.
5. Consideration of facts and decision on the levy of penalty.

Detailed Analysis:
1. The judgment concerns the imposition of penalties under section 271(1)(c) of the IT Act for alleged concealment of income amounting to Rs. 804 in each of the five assessment years from 1969-70 to 1973-74. The penalties were confirmed by the ITO and upheld by the AAC, leading to the appellant's appeal before the tribunal.

2. The appellant, a partner in a textile business firm, contended that he was under a bona fide impression that rental income from a property jointly owned by him need not be disclosed since it was used for business purposes by the firm. The appellant argued that the omission was inadvertent and there was no intention to conceal income. The appellant's counsel highlighted correspondence with the tax authorities to rectify the error promptly.

3. The tribunal considered the appellant's explanation and the revenue's contention that the appellant failed to disclose the income intentionally. The tribunal noted that the appellant voluntarily rectified the omission after realizing the mistake, as evidenced by correspondence with the tax authorities. The tribunal found no mens rea or deliberate attempt to evade tax, concluding that the penalty was unwarranted.

4. The tribunal emphasized that the appellant's actions demonstrated a lack of intent to conceal income, especially considering the negligible amount involved. The tribunal accepted the appellant's contentions, ruling in favor of the appellant and canceling the penalties imposed for all five years, with a direction for refund if already paid.

5. In conclusion, the tribunal allowed the appeals, highlighting the appellant's prompt rectification of the omission and the absence of any deliberate attempt to evade tax. The judgment underscores the importance of bona fide conduct and lack of mens rea in determining the imposition of penalties for income concealment under the IT Act.